Compilation of Insurance and Reinsurance Regulations – Modifications in Insurance Lines and Basic Capital

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Montevideo, October 22, 2024
Ref: COMPILATION OF INSURANCE AND REINSURANCE REGULATIONS – Modifications in Insurance Lines and Basic Capital.
The market is informed that, on October 11, 2024, the Superintendency of Financial Services adopted the following resolution:

1. SUBSTITUTE in Chapter I – Groups and Insurance Lines, of Title I – Insurance and Reinsurance Companies, of Book I – Authorizations and Registrations, of the Compilation of Insurance and Reinsurance Regulations, Articles 1 and 2 with the following:

ARTICLE 1 (GROUPS AND INSURANCE LINES).
The insurance activity developed by public or private institutions, included in the provisions of Law No. 16.426 of October 14, 1993, will be divided into two groups:

I. Property Damage Insurance: Risks of loss or damage to goods or property are insured. The following lines will be distinguished:

• Fire: Corresponds to all those insurance coverages that guarantee indemnification in case of damage to insured goods derived from a fire, with the exception of damages of this kind that are covered by contracts classified in other insurance lines.
• Motor vehicles and towed vehicles: Corresponds to those insurance coverages that indemnify for damages caused to insured motor vehicles and towed vehicles and their occupants, as well as for damages produced to third parties by reason of their use. Civil liability arising from collective land transport of persons is excluded, with respect to transported passengers or third parties, which must be attributed to the Civil Liability line.
• Theft and similar risks: Corresponds to all those insurance coverages that indemnify for the damage or loss of insured goods derived from their unlawful subtraction, including those caused to other objects on the occasion of the commission of the offense. Damages of this kind that are covered by contracts classified in other insurance lines are excepted.
• Civil Liability: Includes those insurance coverages that guarantee liability for damages and losses caused to third parties, with the exception of damages of this kind that are covered by contracts classified in other insurance lines.
• Surety: Corresponds to including those insurance coverages that guarantee the insured an indemnification for patrimonial damages that a third party may cause them on the occasion of the non-compliance with contracted obligations.
• Transport: Corresponds to insurance coverages that guarantee an indemnification in case of damage or loss in the merchandise transported by any means, including the carrier's civil liability for damages to the transported cargo. Likewise, it includes indemnification in case of damage to the insured marine or air hull, including civil liability coverage for damages produced to third parties by its use, as well as coverage for personal accidents of its crew and occupants.
• Work accidents and occupational diseases: Corresponds to the insurance coverages provided for in Law No. 16.074 of October 10, 1989.
• Rural: Corresponds to those insurance coverages that guarantee an indemnification against losses or damages in agricultural, livestock, and forestry production, including those produced on the property and facilities where the activity is developed.
• Others: Corresponds to including any other property damage insurance coverage not indicated above.

II. Personal Insurance: Risks that may affect the existence, bodily integrity, or health of the insured are insured, with the exception of risks of this kind that are covered by contracts classified in other insurance lines.
The following will be distinguished:

• Pension insurance: Comprises collective insurance contracts for disability and death and pension annuities (articles 56, 57, and 59 of Law No. 16.713 of September 3, 1995, and amendments).
• Non-pension insurance: Corresponds to including the remaining insurance coverages for persons.

ARTICLE 2 (OPENING OF LINES AND ASSIMILATIONS).

1. Opening of lines
   The following lines will be divided as detailed below:

a) Surety

• Credit Insurance: Corresponds to those insurance coverages that guarantee an indemnification against the non-compliance with the obligation to pay a granted credit.
• Surety Insurance: Corresponds to including the coverages of the Surety line other than credit insurance.
• Rental Guarantee: Corresponds to those coverages that guarantee property owners against obligations contracted by tenants.

b) Rural

• Agricultural Insurance: Corresponds to those insurance coverages that guarantee an indemnification against losses in insured crops. Other coverages linked to risks directly related to the production or marketing of agricultural products may be included.
• Livestock Insurance: Corresponds to those insurance coverages that guarantee an indemnification against losses that occur in livestock farms and other enterprises related to animal breeding.
• Forestry Insurance: Corresponds to those insurance coverages that guarantee an indemnification against losses in insured forestry plantations.

c) Others

• Engineering Insurance: Corresponds to those insurance coverages that guarantee an indemnification for risks derived from construction and civil engineering works. Likewise, coverages for loss or damage to machinery of any kind are included.
• All Risk Operational Insurance: Corresponds to those insurance coverages that comprehensively back the risks associated with commercial or industrial operations.
• Other Risks: Corresponds to including any other insurance coverage of the Other line not included in the above.

d) Pension Insurance

• Collective Disability and Death Insurance: Corresponds to including the contracts of collective disability and death insurance provided for by articles 57 and 59 of Law No. 16.713 of September 3, 1995, and amendments. It comprises the temporary subsidy for partial incapacity and the coverage for insufficiency of the balance of the pension savings account.
• Pension Annuity Insurance: Corresponds to including insurance contracts through which the insurance company commits to paying a monthly annuity to the insured with a common retirement or advanced age cause (according to what is established by articles 51 and 55 of Law No. 16.713), to the insured to whom total and absolute incapacity for all work has been accredited (according to what is established in articles 19 and 59 of said Law), or to the beneficiaries indicated in articles 55, 60, and 61 of Law No. 20.130, either due to the death of the retiree, the active affiliate, or the affiliate in receipt of the temporary subsidy for partial incapacity.

e) Non-pension Insurance
Non-pension Insurance that generates mathematical reserves:

• Life: Corresponds to those insurance coverages that guarantee the insured or their beneficiaries an indemnification in case of death, survival, or both jointly. It includes coverages that combine protection and savings. Life coverages that generate mathematical reserves must be included. It comprises both individually and collectively contracted insurance.

Non-pension Insurance that does not generate mathematical reserves:

• Life: Includes life coverages that do not generate mathematical reserves and comprises insurance contracted individually and collectively.
• Personal Accidents: Corresponds to including all those insurance coverages that cover bodily damages that the insured may suffer due to an accident, including death, when this is stipulated in the general conditions of the policy. An accident is understood as any unforeseen, involuntary, sudden, and fortuitous event. The coverage provided for in Law No. 16.074 of October 10, 1989, is excluded, which must be attributed to Work Accidents and Occupational Diseases Insurance.
• Health: Corresponds to including all those insurance coverages that comprise the benefits provided with the aim of preventing diseases or restoring the health or physical integrity of individuals, whether granted through a care center or by reimbursement of incurred expenses.
• Miscellaneous: Corresponds to including any other non-pension insurance coverage not included in the above.

In the case of insurance contracts that integrate coverages of different nature, each must be assigned based on its participation in the total premium, considering the openings detailed in Articles 1 and 2, unless those provisions already provide for the inclusion of a part or all of the coverages in question, in which case the criterion established there must be followed. The same procedure must be followed with additional coverages provided for in the insurance contract.

2. Assimilations
   The coverages indicated below will be assimilated as follows:

a) Fire
Material damages on real estate caused by:

• Hurricanes, tornadoes, storms, hail, and other natural phenomena.
• Aircraft precipitation
• Vehicle collision
• Riots, popular disturbances, strikes
• Malicious material damages
• Explosion
• Electrical or electronic malfunctions
• Floods
• Smoke
• Earthquake
• Pipe rupture or overflow

Other damages derived from fire or its assimilations:

• Loss of benefits
• Expenses for rents and/or leases
• Cold stoppage
• Rubble removal
• Dismantling of machinery or cleaning of merchandise
• Personal accidents of the insured
• Civil Liability
• Mandatory horizontal property insurance

b) Motor vehicles and towed vehicles

• Theft
• Fire
• Glass

c) Theft and similar risks

• Purchase protection
• Home combined
• Commerce combined

d) Transport

• Theft of marine and air hull
• Fire of marine and air hull

e) Others / Engineering Insurance

• All Risk Construction and Erection

f) Others / Other Risks

• Pet coverages
• Glass, except those corresponding to motor vehicles and towed vehicles
• Goods or equipment for personal or professional use (for example, works of art, drones, notebooks, cell phones)
• Unemployment
• Extension of guarantee for electrical, electronic, or mechanical equipment
• Fidelity

g) Non-pension Insurance / Miscellaneous

• Travel assistance
• Disability

2. SUBSTITUTE in Title I BIS – Minimum Capital, of Book II – Stability and Solvency, of the Compilation of Insurance and Reinsurance Regulations, Article 19 with the following:

ARTICLE 19 (MINIMUM CAPITAL - GROUP I).
The minimum capital, to be able to function in the insurance activity of Group I, is fixed at the greater of the two parameters determined below:

A. Basic Capital
The basic capital will be the equivalent in national currency to 10,000,000 indexed units (ten million indexed units). For insurance companies operating in the surety line, a capital of 12,000,000 indexed units (twelve million indexed units) will be required. This additional requirement does not apply to companies that operate exclusively in the rental guarantee sub-line. Additionally, for companies operating in more than one line, a capital of 1,700,000 indexed units (one million seven hundred thousand indexed units) will be required for each additional line up to completing seven lines. Insurance companies in operation that begin to operate in the surety line must complete the basic capital required for that line and provide the capital per line stipulated in the preceding clause. It will not be necessary to provide the additional capital per line when seven lines have been completed. The equivalents in national currency of the aforementioned amounts in indexed units will be updated at the end of each calendar quarter.

B. Solvency Margin
The solvency margin will be the greater of the following amounts:

i. Amount based on premiums
a. Premiums for direct insurance, reinsurance, and active retrocessions, issued in the 12 (twelve) months prior to the closing of the considered period (net of cancellations) will be taken. The amount of each month will be updated at the closing of the period based on the variation of the Consumer Price Index prepared by the National Institute of Statistics. b. To the amount determined in a. of this subsection, up to the equivalent to 10 (ten) times the basic capital for one line, 18% (eighteen percent) will be applied, and to the excess, if any, 16% (sixteen percent), summing both results.
c. The amount obtained in b. will be multiplied by the percentage resulting from comparing the claims and settlement expenses paid, net of recoveries and/or salvages and passive reinsurance, from the 36 (thirty-six) months prior to the closing of the respective period, with the same concepts except for the deduction by passive reinsurance. For these purposes, claims and settlement expenses for direct insurance, reinsurance, and active retrocessions will be considered. The amount of each month will be updated at the closing of the period, according to the evolution of the Consumer Price Index prepared by the National Institute of Statistics. This percentage cannot be less than 50% (fifty percent).

ii. Amount based on claims
a. The claims paid (without deducting passive reinsurance) for direct insurance, reinsurance, and active retrocessions, during the 36 (thirty-six) months prior to the closing of the corresponding period, will be summed. The amount of each month must be updated at the closing of the period, based on the variation of the Consumer Price Index prepared by the National Institute of Statistics. To the amount obtained, the amount of pending claims for direct insurance, reinsurance, and active retrocessions (without deducting passive reinsurance) constituted at the end of the considered 36 (thirty-six) month period will be added, and the amount of said concept constituted at the beginning of the period in question, updated at the closing of the period based on the variation of the Consumer Price Index prepared by the National Institute of Statistics, will be subtracted. The resulting figure will be divided by 3 (three). b. To the amount determined in a. of this numeral, up to the equivalent to 7 (seven) times the Basic Capital for one line, a percentage of 26% (twenty-six percent) will be applied, and to the excess, if any, 23% (twenty-three percent), summing both results.
c. The amount obtained will be multiplied by the percentage indicated in point B. i. c. above.

3. SUBSTITUTE in Chapter I – Accounting and Financial Statements, of Title II – Information Regime, of Book VI – Information and Documentation, of the Compilation of Insurance and Reinsurance Regulations, Article 124 with the following:

ARTICLE 124 (CODE OPENINGS)
Insurance companies may make openings of the codes listed in the Chart of Accounts to reflect activity by line, product, or any other classification.
For these purposes, a new digit must be added to the already established code starting with 1, except for line openings whose codes must follow the following order:

1. Fire
2. Motor vehicles and towed vehicles
3. Theft and similar risks
4. Civil Liability
5. Surety
6. Transport
7. Others
8. Work accidents and occupational diseases
9. Rural

Such openings must be communicated to the Superintendency of Financial Services.

VALIDITY: The modifications established above will govern from January 1, 2026.

CRISTINA RIVERO
Intendant of Financial Supervision
2024-50-1-01631